Private Clients

• The global financial crisis of 2007-2008 led to a significant change in the investment industry, with the UK government overhauling the financial sector to prevent a similar crisis from happening again
• Financial Conduct Authority (FCA)


  UK regulatory body responsible for regulating the conduct of retail and wholesale financial services firms
• Prudential Regulation Authority (PRA)


  UK regulatory body responsible for higher level regulation and supervision, including supervising firms and ensuring they have adequate capital
• Retail Distribution Review (RDR)


  Implemented by the FCA in 2012 to improve consumer outcomes from financial advice and rebuild confidence in financial services, including requirements for advisers to pass appropriate exams and changes to commission and fee disclosure
• The Retail Distribution Review (RDR) was implemented by the FCA on 31 December 2012
• The RDR meant that all advisers needed to have passed an appropriate exam at level 4 or higher by this date
• Before the RDR, some advisers had never taken a financial exam and had never been independently tested on their knowledge; instead, the adviser could be 'grandfathered in' on the premise that they had worked in the industry for so long that they were deemed to already have an excellent financial understanding
• Simply working in the industry for a long time did not guarantee that the adviser was either knowledgeable or up to date on industry standards
• The RDR also introduced bans on paying commissions for advice and changes in the way charges and services were disclosed to clients
• The global financial crisis affected almost all countries, although some (eg, China, Japan, Brazil, Peru, Iran, and Australia) were less affected than others
• Regulators around the globe reassessed their existing legislation, amended it where necessary, and created more
• The whole purpose of the legislation was to prevent another global financial crisis from happening again
• Other countries overhauled their financial sectors, with sweeping reforms and major legislative responses, with the aim of increasing the resilience of banks through stronger capital and liquidity buffers
• HM Treasury issued a document called 'A New Approach to Financial Regulation: Building A Stronger System'


  February 2011
• This was enacted by the Financial Services Act 2012
• To ensure that the regulatory structure would be in place on 1 April 2013, the FSA moved to a 'twin peaks' model, whereby the FSA was replaced by the PRA and the FCA
• Some (but not all) firms now require dual authorisation, and those that do not are solely supervised by the FCA
• The Financial Policy Committee (FPC) was established as part of the BoE and charged with the primary objective of identifying, monitoring and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system
• The FPC has a secondary objective of supporting the economic policy of the government
• The BoE oversees the PRA and the FPC, while the FCA is accountable to HM Treasury
• The BoE's primary functions

  • Produce bank notes
  • Oversee payment systems
  • Work to keep the cost of living stable by adjusting interest rates
  • Regulate UK banks and other financial firms
  • Act as the lender of last resort
  • Act as the custodian of the official gold reserves in the UK
• The UK voted to leave the EU (known as 'Brexit')


  2016
• The UK officially left the EU

  31 January 2020
• The end of the UK's transitional period with the EU


  31 December 2020
• New rules took effect

  1 January 2021
• Monetary Policy Committee (MPC)


  A committee of the BoE responsible for formulating monetary policy to maintain price stability and support economic policy
• The UK government sets a price stability (ie, inflation) target, which the MPC must achieve
• The current inflation target is 2% measured by the 12-month increase in the consumer price index (CPI)
• The MPC is required to write an open letter to the Chancellor of the Exchequer providing an explanation if inflation moves away from the target by more than one percentage point in either direction
• In early 2022, UK CPI was 5.5% due to the release of pent-up consumer demand and supply chain issues, exacerbated by Russia's invasion of Ukraine
• The MPC confirmed they would 'take whatever action is necessary to achieve its primary objective of price stability'
• Monetary Policy Committee (MPC)


  Typically made up of nine members, including the Governor, three Deputy Governors, the BoE's Chief Economist, and four external members appointed by the Chancellor
• The MPC's work is overseen by the BoE's Court of Directors, all of whom are appointed by the UK government
• Financial Policy Committee (FPC)


  Contributes to the BoE's mission to achieve financial stability by identifying, monitoring and taking action to reduce risks in the financial system, and supporting the UK government's economic policies
• The FPC has 13 members, six of whom are BoE staff and seven are external members
• The FPC publishes a record of its formal policy meetings and is responsible for producing a Financial Stability Report twice a year
• The UK government must make recommendations about the FPC's responsibilities for financial stability, as well as its growth and employment objectives, to which the FPC must respond
• Prudential Regulation Authority (PRA)


  Responsible for the prudential regulation and supervision of around 1,500 banks, building societies, credit unions, insurers and major investment firms that have the potential to present significant risk to the stability of the financial system
• The PRA has three objectives: to promote the safety and soundness of the firms it regulates, to contribute to securing an appropriate degree of protection for insurance policyholders, and to facilitate effective competition between the firms it regulates in the financial services sector
• The PRA sets standards and policies that it expects the firms it regulates to follow, and monitors compliance with these standards and policies